HAMS Frequently Asked Questions (FAQs)

How can I join HAMS?

You cannot yet join HAMS, because it does not exist. HAMS will not be possible without funding from the Good Governance Levy on the market, which needs government approval. So at this stage, all you can do is give your endorsement to the proposal.

After HAMS is established, the cost of membership will be set as low as possible, to cover only the cost of communicating with members. This is designed to ensure maximum participation in HAMS from investors, in order that HAMS can be representative of a large cross-section of the public market.

The annual membership fee is estimated to be HK$100 (US$12.82) for individuals, and HK$1,000 for non-individuals. The bulk of the operating costs will be met from the Good Governance Levy.

We estimate that there are 500,000 regular investors in Hong Kong stocks, and would expect that at least 10% of them (50,000) will be active enough to join HAMS within its first two years.

How can I endorse HAMS?

The endorsement list  was published on 3-Sep-01. If you are at a senior level in an asset manager, listed company, investment bank, brokerage, law firm, accountancy, financial media, investor relations firm or any other market participant, then contact us for information on the procedure for your organisation to join the endorsement list.

If you are an individual, you can click here to send your support to the Financial Secretary's office. If that link doesn't work, the address is: fso@fso.gov.hk

How will HAMS be funded?

The problem of funding is one of the key reasons why no investor representation has happened in Hong Kong. The playing field is so tilted in favour of listed issuers and controlling shareholders that it is not possible to rebalance it without substantial expenditure on "top-down" regulatory reform and enforcement of legal rights. This rules out the possibility of a private-sector group operating on a small budget, of the sort seen in more developed markets such as the US and UK. There, most companies are diversely owned with no controlling shareholder, and activism happens at the "bottom-up" through shareholder voting.

Therefore HAMS will only happen with central funding from all investors, by a Good Governance Levy on the market. This is proposed to be 0.005% on each trade, or $1 for every $20,000 bought or sold. Based on year 2000 turnover, this would raise about $300m, or 0.008% of the "free float" value of shares held by the public. The value for 2001 will likely be lower as turnover is down.

 It would take 125 years to spend just 1% of the free float on the Good Governance Levy. by comparison, we estimate investors lose 2.5% each year from bad governance.

No taxpayer funding is needed - this is about investors paying for their own benefits. Even passive investors, who do not join HAMS, will benefit from the improved governance that HAMS produces, in terms of lower losses from fraud and other malfeasance. They will also have free access to the corporate governance ratings produced by the Appraisal Division of HAMS, and investors will be able to benefit from compensation claims by joining HAMS when they see a case which affects their particular investments.

What are the checks and balances on HAMS?

There are two aspects to the oversight of HAMS: the Legislative Council and a democratically elected Board of Governors.

The Good Governance Levy, and any change to it, needs the approval of the Legislative Council, so there is a direct mechanism of accountability to Legislators, who in turn are accountable to the public. The Chief Executive of HAMS, and his or her senior colleagues as needed, could appear before LegCo perhaps twice a year to give testimony to lawmakers on the progress and activities of HAMS.

The Executive staff of HAMS, including the CEO, would be overseen by a non-executive Board of Governors, who would be elected by members of HAMS. Half would be elected by individual members and half would be elected by non-individual members, including institutional investors.

The Board of Governors would therefore by accountable to the public investors, and that chain of accountability would reach down to the executive staff of HAMS.

Who would run HAMS?

The senior staff of HAMS would be chosen through an open recruitment process. Heads of the three divisions (Policy, Appraisal and Enforcement) would report to a Chief Executive Officer (CEO) and all would report to the non-executive Board of Governors elected by members. 

How would HAMS work with the SFC and other Regulators?

The Securities and Futures Commission is the government-controlled regulator of the markets. It oversees the Stock Exchange and directly regulates brokers and asset managers. The SFC carries out investigations into market manipulation and insider dealing, amongst other things. Under the new SFC Bill currently being considered by the Legislative Council, the investigatory powers of the SFC will be improved, and cases may be referred to a new Market Misconduct Tribunal. Findings of the MMT will be admissible as evidence in civil cases.

HAMS would take the findings of the MMT and where appropriate, would make claims for compensation on behalf of investors. If these claims could not be settled out of court, then if necessary, HAMS would use litigation.

HAMS would also process complaints from members and, if SFC action was needed, HAMS would represent investors to pursue this. The Policy Division of HAMS would continuously analyse the whole legal and regulatory framework from the investor perspective, and make proposals for improvements to bodies such as the SFC, Hong Kong Society of Accountants, the Stock Exchange and the Government.

When would HAMS be launched?

That depends on the Government. If the Government adopts the proposal, then a Steering Committee would be needed to oversee the preparation, including drafting of enabling legislation by Government (including the Good Governance Levy), passage of the bill through the Legislative Council, selection of premises, recruitment of senior staff, and budgeting.

When Government decides to do something in HK, it can act remarkably fast - the entire merger of the Stock and Futures exchanges and the subsequent flotation of HKEC took around one year.

So starting from the point at which Government decides to adopt HAMS, it should be possible for HAMS to be open for membership within one year. A temporary Board of Governors would be selected by the Steering Committee, and these Governors who would serve until there were sufficient members of HAMS to hold a direct election.

What is the connection between HAMS and Webb-site.com?

Webb-site.com is a not-for-profit site promoting better corporate and economic governance in Hong Kong. It was founded in 1998 by David Webb, a retired investment banker who designed the initial proposal for HAMS. He is a member of the government's Shareholder Sub-committee of the Standing Committee on Company Law Reform, the Takeovers and Mergers Panel, and the SFC Shareholders Group. Mr Webb would be willing to stand for election to the Board of Governors of HAMS, but will not be the CEO.

The opinions expressed by Webb-site.com from time to time are independent of HAMS (which does not yet exist) and its endorsers.

Where can I found out more about HAMS?

To read the original proposal for HAMS, click here.

Media and other enquiries

Contact David Webb by e-mail.


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